Currency market: EUR/USD and GBP/USD long term

Brian Twomey Brian's Investment

EUR/USD for December and January traded 111 pips from 1.1273 to 1.1384. The reversion to 1.1300's and a neutral price is driven by 1.1387, 1.1435, 1.1480 and 1.1511. EUR/USD's problem is overall price drivers are contained within middle monthly averages.

EUR/USD averages lack anything close to uniformity. EUR/USD drops were met by deeply oversold longer dated averages to force EUR higher to neutral 1.1300's. If EUR/USD averages were orderly and aligned properly, EUR would've trended to lower targets at current 1.1057.

The positive aspect to EUR/USD is it trades below every average yet every average is rising ever so slowly and explains EUR/USD slow grind lower. A higher EUR meets a concentration of averages from 1.1387 to 1.1900's and aligned less than 100 pips apart. EUR 1.1400's, 1.1500's and 1.1600's form a solid steel wall.

The best targets currently are located at 1.1057 then bottoms at 1.0900's and 1.0800's. From 1.0900's assumes DXY trades to its tops at 99.00's. Also assumes DXY contains 300 pips to travel higher and matches 300 EUR pips to 1.0900's from 1.1200's.

EUR/USD's target is benchmarked by seasonality. Within any given year, traditional EUR/USD downtrends begin in December/ January and ends May/June then begins EUR/USD's 6 month uptrend.

EUR/USD's December/January drop is the result of the European Parliament's funding of the annual budget beginning normally by December. A traditional lower EUR in January allows funding the budget at a lower cost. EUR has 6 months to achieve targets.

GBP/USD

GBP/USD's situation is similar to EUR/USD as averages lack uniformity yet averages are positioned to allow GBP a valid trade range. GBP/USD trades 1.3357, 1.3443 and 1.3492. Above 1.3492 becomes 1.3492 to 1.3760. Overall lower range is located from 1.3492 to 1.3298 then a brick wall to averages exists at 1.3100's.

A lower GBP/USD rises as longer-dated averages at 1.3700's and 1.3800's trade oversold and forces GBP higher. Overall averages are rising.

Banks target GBP/USD by end of 2022 at 1.2500's. The target at 1.2500's is pushing the envelope too far and assumes breaks at 1.3193, 1.3180, and 1.3120. A break at 1.3100's targets bottoms at 1.2700's and 1.2600's. GBP/USD lows for the year coincide with UK February/March budgets. GBP/USD failure to break 1.3100's targets 1.3400's.

For the week, vital breaks for higher/ lower are located at 1.3492 and 1.3503.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

EUR/USD weakens as US jobs data trims Fed rate cut bets

The EUR/USD pair trades in negative territory for the third consecutive day near 1.1860 during the early European session on Thursday. Traders will keep an eye on the US weekly Initial Jobless Claims data. On Friday, the attention will shift to the US Consumer Price Index inflation report.

GBP/USD bullish outlook prevails above 1.3600, UK GDP data looms

The GBP/USD pair gains ground near 1.3635, snapping the two-day losing streak during the early European session on Thursday. The preliminary reading of UK Gross Domestic Product for the fourth quarter will be closely watched later on Thursday. The UK economy is estimated to grow 0.2% QoQ in Q4, versus 0.1% in Q1.

Gold remains on the defensive below two-week top; lacks bearish conviction amid mixed cues

Gold sticks to modest intraday losses through the Asian session on Thursday, though it lacks follow-through selling and remains close to a nearly two-week high, touched the previous day. The commodity currently trades above the $5,070 level, down just over 0.20% for the day, amid mixed cues.

UK GDP set to post weak growth as markets rise bets on March rate cut

Markets will be watching closely on Thursday, when the United Kingdom’s Office for National Statistics will release the advance estimate of Q4 Gross Domestic Product. If the data land in line with consensus, the UK economy would have continued to grow at an annualised pace of 1.2%, compared with 1.3% recorded the previous year.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.